To be considered a Hospital Ship the vessel must be inspected and signed off by the International Red Cross in accordance with the international conventions for warfare at sea in place at the time. For WW2 this would probably be the 2nd Geneva Convention.
In September 1914 Captain(D) Cecil Fox of the 3rd Destroyer Flotilla sank with gunfire the German hospital ship SS Ophelia. Fox declared her an armed naval auxiliary and when investigation disproved this allegation, the story changed that she carried ciphers and was acting as a scout for the High Seas Fleet. Ophelia had been ordered to the Texel to save lives where Fox had annihilated the four torpedo boats of the HSF VII-Half Flotilla in the Battle of Texel. Ophelia's crew was treated as POWs whereas international convention was that they should have been interned and exchanged as they were at sea specifically to save lives.
Later when U-Boats torpedoed British hospital ships in the Channel and HMHS Britannic was sunk by mine in the Aegean, British propaganda howled with faux outrage as the Ophelia incident had been public knowledge and Captain Fox was commended by the Admiralty for his actions.
It sucks to sink a hospital ship: SH3 GWX3 once executed me for sinking one by accident. I had fired a pair of FaTs into a convoy and that was the only hit but there is absolutely nothing wrong with the way that hospital ships are implemented in the game.
-C
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